Michael Noonan (Limerick East, Fine Gael)

A tranche of assets should be sold, even if they must be sold cheaply, to get the process started again. The 1% universal levy on all property, with 2% on properties worth more than €1 million, is onerous enough. It means nothing now because there is no market but it will be a heavy enough charge when the market picks up. I suggest that in the course of the finance Bill the Minister should consider a capital gains tax on the family home, which would be much less onerous. The problem with the proposal is it will hit everyone who is in negative equity and all those who paid significant stamp duty over the past ten years. If one made the change through the capital gains code, one could exempt these categories, from which one would not make a profit in any case. I am suggesting an alternative means of raising tax through stamp duty.

Many of the changes in public service pensions had been announced. While public servants will not like the levies, which had been announced previously in the four year plan, many of the former public servants to whom I have spoken told me that, ultimately, they do not object to being treated on an equal basis with existing public servants. In the times that are in it I will not quarrel with that view.

The Minister did not do anything for people in negative equity, which is serious gap. The Fine Gael Party has a proposal in this area for which it will not charge the Government a penny if it is implemented in the finance Bill. If one were to increase to 30% the tax relief available to those who bought at the top of the housing market between 2004 and 2008, it would save those with a mortgage of €300,000 about €900 per annum. This is a targeted relief which one could pay for by withdrawing mortgage relief for sales completed from June 2011 onwards. My party had this proposal costed by the Department. Anyone who buys a house from next June is buying at the bottom of the market. They do not need assistance through the tax code to buy property because they are buying at knockdown prices. I ask the Minister to examine these proposals and try to make some adjustments.

The Minister proposes a whole series of excise duties. We will examine these in the course of the debate on the financial resolutions tonight. He has also made proposals on the salaries of Ministers and Deputies and proposes to cap public servants' salaries. If we, in this House, do not start cutting our own prospects and salaries, we do not have the moral authority to prescribe tough medicine for others. It is not clear what the Minister proposes to do regarding Members. Will a Deputy of 30 years standing be considered a new Deputy if he or she is re-elected in March next? If so, will he or she be hit by the 10% reduction in salary for new public servants? Is that the Minister's intention? The phrase he used is ambiguous. The position should be spelt out explicitly and without riddles because members of the public want to know what is happening with our pay and conditions.

I thought the Minister would take the opportunity to introduce the changes in VAT he announced in the four year plan. It is the Government's intention - it has negotiated this in the deal with the IMF - to increase the 21% VAT rate to 22% in its second or third budget and 23% in its third or fourth budget. While the retail sector will not like this change, much of the goods on which the higher rate of VAT is charged are imported. The Minister should restructure his proposal in this regard and try to do something for employment by reducing the lower 13.5% rate of VAT to 12%. While it should be reduced further, if possible, the Minister can certainly afford to reduce it to 12%. The lower rate of VAT applies to domestic sectors such as the building and service industries, including restaurants, the food trade, bars, hairdressers and newspapers. Service industries are significant employers who have low margins. A small adjustment in the VAT rate would get people back to work in these sectors.

I am not making a political point in stating that the Minister could introduce a series of supply side measures to get more people back to work. Reducing the lower rate of VAT is one measure that would work because it would reduce costs and get people back to work. The Minister has tried to achieve this goal by reducing the minimum wage by €1. My proposal is an alternative approach which would probably provide good value.

The Fine Gael Party has also proposed that the 8.5% rate of employers' PRSI should be abolished for employees earning up to the level of the minimum wage. This, too, is a low cost measure which would save an employer who takes on a new worker €30 per week. It is difficult to employ low skilled young people at the bottom end of the market. For this reason, the Minister should consider what economists describe as supply side initiatives. While I am aware he does not have billions of euro to spend, the measures I propose are focused and targeted at increasing employment and securing more growth in the economy. They also have the great advantage of costing very little.

The Minister was silent on carbon tax. I thought the Green Party had convinced him that he should move again on carbon tax but he has chosen to move on excise on fossil fuels. He must make up his mind on how he will tax fossil fuels. Will he continue on the excise route or opt for carbon taxes? When one takes both options everyone is hit twice. It is not long since a significant increase in carbon taxes was introduced and now we have another increase in excise.

My primary objection to what the Minister is doing is that he does not have a jobs and growth industry. He did not mention the agricultural and food industry which is back on its feet, thank God.

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